What Are the Equator Principles?

Equator Principles (EPs), financial terminology, is a set of voluntary voluntary standards used to determine, measure, and manage social and environmental risks for project finance or credit crunch Management.

Equatorial principle

The Equator Principles were affiliated with the World Bank in October 2002

The Equator Principles are a set of unofficial regulations, developed by the world's major financial institutions in accordance with IFC's environmental and social policies and guidelines. Set of voluntary principles. The origin of the Equator Principles lies in the performance of financial institutions

1. New project financing with a total investment of more than 10 million US dollars (including 10 million US dollars)

2. Project financing related to the expansion of old projects that may have a significant impact on the environment and society and the upgrading of existing equipment

3. Project financing financial consulting services

The content and structure of the equatorial principles are relatively simple, including the preamble, the scope of application, the statement of principles and the disclaimer. Among them, the preamble briefly explains the motivation, purpose and significance of the introduction of the Equator Principles; the scope of application stipulates that the Equator Principles are applicable to all new project financing and expansion due to the total cost of project funds in various industries of the world exceeding USD 10 million.

Article 1 provides the basis for classifying project risks, that is, internal guidelines based on IFC's environmental and social review standards (for details, see Annex 1 to this document).

Article 2 specifies the environmental assessment requirements for Class A and B projects, including

The significance of the Equator Principle is that for the first time, it clarifies and specifies the fuzzy environmental and social standards in project financing, and provides an operational guide for banks to evaluate and manage environmental and social risks. As of December 2007, there have been 56 financial institutions adopting the "Equator Principles", with operations in more than 100 countries around the world, and total project financing accounts for more than 80% of the global project financing market share. But in Asia and the Pacific, there are only six financial institutions that accept the Equator Principles. Becoming a financial institution that adheres to the Equator Principles does not require any agreement to be signed, but merely declares acceptance of the Equator Principles. Although the Equator Principles do not have the effect of legal provisions, with the wide application in the international project financing market, the Equator Principles have gradually become the industry standard and international practice in international project financing.

1. In the application of the Equator Principles, the Equator Bank actually became a civil agent for environmental and social protection . Generally speaking, global environmental governance is carried out by countries through the signing and ratification of multilateral environmental treaties and agreements and applicable to natural persons, legal persons and other organizations within a country. In the Equator Principles, the subject of environmental and social protection is the Equator Bank. It is not a country, it is based on a special financial document, not an international treaty and agreement. By urging the sponsors and borrowers of the project, Equatorial Bank directly monitors the application of environmental and social standards in the project, thereby achieving the purpose of protecting society and the environment. The application of the equatorial principle is limited only by the condition of project financing, not by national boundaries. Equatorial Bank's environmental and social protection behavior echoed the official behavior and became a powerful civilian force.

2. In practice, the equatorial principle has evolved into industry practice . It is not an international treaty and it has not yet formed an international organization. Financial institutions that accept these principles do not need to join or sign an agreement. They only need to declare that they have or will establish internal policies and procedures consistent with the principle. The founders of the Equator Principles did not want to create a banking group or a closed club, but instead wanted to build an attractive "church as wide as possible". The equatorial principle itself does not grant any organization or individual the right to enforce it, so the legal binding force is not strong. But it has become the industry standard and industry practice for the social and environmental aspects of international project financing. China's existing Environmental Impact Assessment Law,

The Equator Principle is like an important milestone for the responsible banking industry. For the first time, it clarifies and specifies the vague environmental and social standards in project financing, so that the environmental and social standards of the entire banking industry are basically unified. It is conducive to leveling the playing field, and it is also conducive to forming a virtuous circle and improving the moral standard of the entire industry. For a single bank, accepting the Equator Principles is conducive to acquiring or maintaining a good reputation, protecting market share, and also conducive to good corporate governance and Scientific and accurate assessment of financial risks can also reduce the political risk of the project; for the entire society, the environmental and social sustainable development strategy can be implemented, and Equator Bank objectively becomes a private agent to protect the environment and society By playing the core role of finance in the construction of a harmonious society, people and nature, people and society, people and people can achieve true harmony.

China's banking industry is also beginning to recognize the environmental and social risks

For a long time, the Chinese banking community has not paid enough attention to environmental and social issues. Some banks and bank executives do not even know that environmental and social issues are related to banking business. They believe that this is a matter for environmental protection departments and labor and social security departments. A reporter described the negotiations between the two parties before the IFC's participation in Nanjing Commercial Bank in 2001: "The most surprising thing is that when the IFC project team came to negotiate, the first agenda item was actually" environmental protection ". , Required Nanjing City Commercial Bank to issue an Environmental Commitment Letter in accordance with international practices and establish an environmental management system. This is undoubtedly a new concept for domestic banks.

Steering Committee

Equator Principles Financial Institutions currently have 72 financial institutions from around the world

Citigroup

Including Asia, Australia, Brazil, Europe, Latin America, the United Kingdom and the United States.

On March 26, 2010, Citi, one of the four founding banks of the Equator Principles, was selected as the chairman of the new Equator Principles Financial Institutions Steering Committee because of its long-term contribution to the development of the Equator Principles. Mr. Shawn Miller, as the director of Citi's global environmental and social risk management, will be specifically responsible for carrying out the work of the relevant presidential agency on behalf of Citi.